Muddy Waters as Apple & Samsung Face Retrial

     SAN JOSE, Calif. (CN) – The legal wrangling between Apple and Samsung continued unabated just hours before the start of the retrial over half of the $1 billion award a jury handed Apple 15 months ago, knocked down by a federal judge earlier this year.
     A jury found in August 2012 that Samsung had “slavishly copied” iPhone and iPad patents to create its own line of smartphones and tablets, and awarded Apple $1.05 billion in damages. But earlier this year U.S. District Judge Lucy Koh halved that after determining jurors had ignored her instructions by using the calculation theories of Apple expert Terry Musika, which she had ruled as legally impermissible before the trial ended.
     Finding she could not calculate appropriate damages on her own and refusing to “turn a blind eye or ‘bend over backwards’ to find a possible permissible justification for the amount awarded,” Koh ordered a new trial – with a new jury – on the damages, involving 13 devices and $450 million or more.
     While that face-off begins Tuesday, both sides are also preparing for a second patent infringement showdown set for Koh’s courtroom on March 31, 2014 over newer additions to their product lines, including the iPhone 5, Galaxy S3, and Galaxy Note 10.1. That circus has been overshadowed in recent days by allegations that Samsung’s legal team at the firm Quinn Emanuel Urquhart & Sullivan sent unredacted key terms of Apple’s licensing agreements with Nokia, Ericsson, Sharp and Philips to Samsung employees despite a protective order.
     Apple learned of the leak after Nokia met with Samsung’s licensing executives, who admitting knowing the confidential terms of the Apple-Nokia licenses. Last month, U.S. Magistrate Paul Grewal – who handles the pretrial minutiae of the Apple-Samsung fracas – ordered Samsung to produce all relevant emails and communications and to make employees and licensing executives available for deposition.
     After conducting an in camera review of “boxes upon boxes” of Samsung’s documents, Grewal said only three things were clear: that (a) Quinn Emanuel failed to redact sensitive business information and “pervasively distributed” details to unauthorized employees, (b) Samsung used the information in its negotiations with Nokia and Ericsson in 2012 and 2013, and (c) Quinn Emanuel failed to do anything despite being informed about the leaks on numerous occasions.
     Grewal gave Samsung until Dec. 2 to explain why it shouldn’t face sanctions, and set a hearing on the matter for Dec. 9.
     Meanwhile in Koh’s courtroom, bickering over experts and lost-profit theories have dominated the companies’ filings over the last several weeks. Late Wednesday, the judge granted – sort of – Samsung’s request to keep an Apple expert from testifying that the South Korean company copied patented technology and why it conducted competitive analysis of Apple products.
     According to Samsung, Apple’s expert Julie Davis – replacing Musika, who died of pancreatic cancer last December – lacked the proficiency to testify on whether copying took place and anything else outside of raw financial figures. For its part Apple argued that Davis, like Musika before her, had no intention of using the word “copying” to describe Samsung’s actions because she is admittedly an economics expert and not a legal or technology guru.
     But after admonishing Apple that Davis could not use synonyms for copying either – including “replicate,” “reproduce,” “emulate,” or “adopt” – Koh said Davis could expound on any theories advanced by Apple’s technical experts before she takes the stand, under a precedent set by the recent high-tech blockbuster battle between Oracle and Google.
     “To the extent that Apple’s technical experts provide conclusions at the retrial regarding Samsung’s adoption of Apple’s features, Davis may assume those conclusions as fact in her testimony because her assumptions will be based on foundational testimony given at trial,” Koh wrote. “In ‘Oracle,’ the court allowed Google’s damages experts, who were both economists without technical expertise, to assume as fact the technical conclusion that Google had non-infringing alternatives to the patents and copyrights at issue at the time of the parties’ hypothetical licensing negotiation. The court overruled Oracle’s Rule 702 objection to the experts’ reliance on this conclusion because ‘both experts relied on Google’s non-infringement experts, interviews with Google’s employees, and documentary evidence for the technical points.’ Thus, ‘Oracle’ holds that a damages expert may assume the truth of a technical opinion in her analysis when she relies on foundational testimony given at trial.”
     Koh also noted that Davis’ report includes testimony from technical experts in the first trial that Samsung copied Apple’s products, and witnesses in the retrial are prohibited from relying on testimony presented in the first trial. Therefore, the judge said, Apple must start from scratch to lay foundational technical testimony for Davis to rely on.
     But Koh barred Davis from advancing her new theory as to why Samsung copied Apple products: Consumer demand. Rather than using evidence presented by Musika that Samsung’s own internal documents simply showed that consumers want Apple products and features, Davis violated a “no new theories” order by claiming that demand in itself proved Samsung’s decision to copy.
     The judge also dismissed Samsung’s concerns that Davis would testify about the company’s supposed competitive analysis of Apple’s iDevices, finding the expert never expressed an opinion as to why Samsung conducted such analyses in her reports.
     And late Sunday, while other Americans enjoyed the Veterans Day holiday weekend, Samsung’s lawyers accused Apple of “sandbagging us with a brand new damages theory never disclosed in the expert reports of either Musika or Davis. Samsung learned for the first time that – in violation of the court’s order – Apple still intends to seek lost profits on two other patents.”
     In its emergency motion, Samsung says Apple’s latest move ignores its own expert reports.
     “Apple has still not disclosed the mystery theory that would allow Apple to seek lost profits on patents for which its damages expert only calculated a reasonable royalty,” Samsung said in the filing. “It is axiomatic that new damages theories disclosed on the eve of trial are prejudicial and should be excluded. Furthermore, any attempt to request lost profits for the two patents would necessarily rest on new calculations, in violation of the court’s prior orders.”
     The South Korean company continued: “Nor can Apple avoid the effect of the court’s orders by arguing to the jury that Davis’s lost profits calculations merely represent a lower limit on damages. Numerous courts have held that parties cannot shift damages theories during trial by claiming that the figures presented in their expert’s report constitute a floor, not a ceiling. Nowhere in Davis’s report does she explain how to calculate additional lost profits Apple should receive in damages, and Apple should not be permitted to argue to the contrary.”
     Koh issued an emergency order early Tuesday blocking Apple’s bid to advance the new theory, as well as its attempts to seek damages for the other two patents.
     Jury selection in the seemingly unending kerfuffle begins Tuesday morning, and the retrial is slated to last six days. And while both sides – and Koh – hope to wrap business up completely by Nov. 22, the judge signed an order over the weekend that will force deliberations to continue into Thanksgiving week and beyond if necessary.
     However, compared to the jury verdict form in the original trial – 700 questions spread across 22 pages – the jury this time only has to decide how much Samsung owes Apple, and offer a breakdown of damages for the 13 infringing products.
     Samsung has already appealed the remaining $600 million award to the Federal Circuit, where hearings are expected in late 2014 or early 2015. That court is also expected to decide soon whether it will permanently block U.S. sales of older infringing Samsung products from the original trial.

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